Doubts about LIC's solvency were raised in some quarters sometime back (See ).

As the IRDA regulations stipulate that the provision should be 150 per cent of the minimum solvency margin, the corporation has written to IRDA asking for five years' time to provide for the balance Rs 5,000-odd crore. IRDA chairman C S Rao says the matter is under consideration and a final decision is yet to be taken (See Sharing responsibilities).

The surplus for the year ended 31 March 2003 after provisions amounts to Rs 9, 647 crore, which will be divided between the Indian government (5 per cent) and policyholders (95 per cent).

It is also learnt that the consultancy firm appointed by the central government to look into LIC's solvency has more or less finalised its report. According to available indications, there are no adverse comments about LIC's financial position or its solvency.

On the business front, LIC is maintaining its industry leadership with a 24-per cent increase in its first premium. As per figures available up to 15 August 2003 this fiscal, LIC in the individuals segment booked a new premium of Rs 1,166.30 crore, selling 51.11 lakh policies for a sum assured of Rs 35,341.90 crore while the collections under single premium policies is Rs 91.22 crore.

The pension (excluding the Varishtha pension scheme) and group businesses have shown exceptional growth for LIC. Under the pension scheme, the first premium is Rs 90.01 crore. Under the newly launched Varishtha pension scheme, LIC has mopped up Rs 1,490 crore till 23 August 2003, selling 83,000 policies.

In the group business, LIC has covered 3.96 lakh lives up to July 2003 to earn a premium of Rs 594.86 crore. Much to the discontent of the private players, LIC is bagging the group business with its competitive premium rates. LIC is going strong in offering group insurance policies for various nationalised bank customers.

Performance highlights for the year ended 31 March 2003

Total income

80,938.49

Total premium income

54,602.37

Investment income

25,030.50

Miscellaneous income

1,305.62

Total payments toPolicyholders

20,746.74

Total investments

63,391.18

Total life fund

2,72,999.06

Total assets

2,90,624.34

Rs: In crore

In addition to having 10.02 lakh agents who bring in around 28 policies each per year, LIC is aggressively embracing alternate distribution channels like bancassurance and corporate agents. It has roped in 194 corporates with 795 outlets and 13 banks with 5,512 outlets and the business procured through these channels was Rs 54.18 crore for a first premium of Rs 3.74 crore.

About the channel productivity, Nair says: "The average sum assured per policy brought by individual agents is around Rs 80,000 and the average annual premium per policy is around Rs 4,000. In the case of corporate agents, the average policy size is Rs 1.7 lakh for a premium of Rs 7,000 per year."

LIC, in the meantime, is beefing up its investment portfolio. The corporation has invested around Rs 22, 200 crore in central government securities and Rs 4,800 crore in state government securities. This fiscal, LIC hopes to exceed its last year's investment figure of Rs 63, 391 crore. Investing a sizeable amount in equities when the stock market was low, LIC is now liquidating its portfolio to book profits.

The owner of several real estate properties, LIC is taking steps to realise better returns. In Chennai, where the corporation owns the 14-storied landmark building, efforts are on to release around 16,000 square feet for rent.